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World's Best Banks 2013: Africa

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Africa is one of the fastest-growing markets in the world for mobile payments. Money transfers using mobile phones will exceed $200 billion in the continent in 2015, according to Airtel, which has partnered with banks in Africa to bring mobile-banking services to 99% of rural households that do not have bank accounts. This “financial inclusion” is having a major impact on countries such as Rwanda and Sierra Leone, where the expansion of credit to the private sector is boosting economic growth and reducing unemployment.

ATM and point-of-sale networks are expanding rapidly across Africa, along with village savings and loans and microfinance. The vast majority of African businesses are small and medium enterprises, which are the engines of future growth. Easier access to banking services through advanced delivery channels is empowering small businesses by making working capital available and providing a more convenient way to purchase products.

Meanwhile, the continued spread of pan-African banking institutions is helping to draw the continent closer together through cross-border payments and trade finance. At the same time, many of the major banks in Africa have partnered with Chinese financial institutions to serve the growing trade and investment links between Africa and China, which has an appetite for the African continent’s bounty of natural resources.

REGIONAL WINNER

AFRICA

Ecobank Transnational

Ecobank Transnational, based in Lomé, Togo, has affiliates in 33 countries in Africa. It opened its 33rd affiliate in January in Equatorial Guinea, completing its presence in all of the member countries of the Monetary and Economic Community of Central Africa. With more than 2,000 branches, the Ecobank-Nedbank alliance, established in 2008, is the largest banking network in Africa. It provides a service that enables companies to gain access to contacts with a clear understanding of local markets in 35 African countries. The alliance also offers transactional banking, financing and investment banking services. Ecobank has partnered with Airtel to offer mobile-banking services in 14 countries. Thierry Tanoh, Ecobank’s group CEO, says: “We believe passionately in Africa’s long-term growth potential.” The bank expects deposit growth of more than 20% this year and targets revenue growth of 15%. Ecobank acquired Nigeria’s Oceanic Bank International in 2011. Last year it completed the acquisition of Trust Bank of Ghana.

Arab Banking Corporation Algeria is a universal bank serving retail and commercial customers. It is a subsidiary of Bahrain-based Arab Banking Corporation, which has offices in 22 countries. Trade finance has been the focus of ABC Algeria’s corporate banking department in recent years. The bank’s clients benefit from ABC’s extensive international network. Algeria’s hydrocarbon-dependent economy is expected to grow at a 3.5% annual rate over the next two years, according to the International Monetary Fund.

Banco Espírito Santo Angola has 40 branches in Angola and plans to open a dozen more this year. The bank opened a new headquarters building in Luanda in December 2012. BESA is a 52%-owned subsidiary of Portugal-based Espírito Santo group. Banco Espírito Santo Investimento Brazil, another subsidiary of the Espírito Santo group, plans to begin direct operations in Angola and Mozambique this year. Angola formed a $5 billion sovereign wealth fund last year to invest the country’s oil wealth.

Standard Chartered Bank Botswana, the country’s oldest bank, plans to double its lending to small and medium enterprises this year. The bank says SMEs account for about 42% of the country’s GDP and that they are critical to its future growth. The government of president Ian Khama is attempting to diversify the economy and reduce its reliance on diamonds. SMEs are active in manufacturing, tourism, construction services and agriculture. Standard Chartered has 18 branches and agencies in the country.

Ecobank Burkina Faso is the country’s leading bank, with a network of 40 branches. The bank partnered with Airtel last year to introduce the first mobile-banking service in this landlocked Western African country. Gold and cotton are Burkina Faso’s main export earners. Ecobank Burkina Faso offers a wide range of services, including a financing program adapted to the needs of small and medium enterprises.

UBA Cameroon has 14 branches in this West African country, which obtains more than half of its export earnings from oil. The UBA group has more than seven million customers in 19 African countries and maintains offices in New York, London and Paris. Founded in 2007, UBA Cameroon has a strong retail banking franchise.

Ecobank Côte d’Ivoire has 540 employees in 40 offices in this West African country. The bank is heavily involved in financing commodity exports. The bank’s assets rose 25% in 2012, while deposits and loans both grew by 15%. Ecobank entered into a $200 million risk-participation agreement with the African Development Bank in February to facilitate trade-finance activities in Africa.

Standard Bank Congo is part of South Africa’s Standard Bank Group, which has assets of $81 billion and a presence in 18 sub-Saharan African countries. The bank finances commodity exports and serves subsidiaries of multinational corporations. The Democratic Republic of Congo has some of the world’s most extensive copper and cobalt deposits. The International Monetary Fund and the World Bank granted the country a $12 billion debt-relief package last year under the Heavily Indebted Poor Countries initiative.

International Commercial Bank (Djibouti) is a fast-growing retail and commercial bank with project financing capabilities. The bank’s assets increased by 71% last year, deposits grew by 84%, and loans and advances increased 20%. Djibouti is a small but strategically located country on the Horn of Africa. Overlooking the Gulf of Aden where it connects to the Red Sea, Djibouti is the only sub-Saharan African country to host a US military base. ICB-Djibouti is one of 14 banks owned by Switzerland-based ICB Financial Group.

Nib International Bank opened 11 new branches last year and now has 62 branches in Ethiopia. Despite a directive from the central bank requiring commercial banks to invest 27% of disbursed loans in treasury bills, Nib had record earnings last year of 283 million birr ($15.3 million), an increase of 16.4% from a year earlier. The bank has worked with the International Finance Corporation and TechnoServe, a US-based nongovernmental organization, to increase the use of wet milling to produce higher-quality coffee for export.

Standard Chartered Bank Gambia derives much of its earnings from foreign exchange trading. The bank has five branches in Gambia, the smallest country in Africa. Gambia’s economy is largely agricultural, and peanuts are the main export crop. Gambia’s GDP declined by 1.6% in 2012, as tourism was impacted by the European debt crisis.

Ecobank Ghana was established in 2004 and has 79 branches. It acquired Trust Bank of Ghana in a stock-swap transaction last year, giving Ecobank wider access to lending to small and medium enterprises and making it the largest bank in Ghana. The services sector accounts for half of the country’s GDP. Economic growth last year was 8.2%. Gold and cocoa exports contribute to foreign exchange earnings.

Ecobank Guinea Conakry has a network of 16 branches in this mineral-rich country, which exports bauxite and alumina, iron ore, gold and diamonds. Conakry, the capital and largest city, is a port on the Atlantic Ocean. Ecobank established its operations in Guinea in 2009. The government is attempting to stimulate new investment in mining and has revamped the mining code.

Britain’s Barclays Bank is consolidating its holdings in Africa under a single office. Former Barclays Bank of Kenya managing director, Adan Mohamed, was named chief administrative officer of the bank’s Africa office. Jeremy Awori, former CEO of Standard Chartered Bank Tanzania, replaced Mohamed as managing director of Barclays Bank of Kenya in February. It is the leading bank in Kenya, with 117 branches, and posted an 8% rise in pretax profits in 2012.

The Bank of Africa­—Madagascar is part of the Bank of Africa group, which has a presence in 14 African countries. The Bank of Africa—Madagascar has 65 branches and accounts for about one-third of the banking assets of this Indian Ocean island country. The bank launched mobile-banking services last year in partnership with Airtel. Madagascar’s GDP grew 2.7% in 2012 and is expected to grow faster this year, as Canada’s Sherritt International begins output at one of the world’s biggest nickel mines.

Bank of Africa­—Mali, established in 1982, is the largest bank in the Bank of Africa group, which has its headquarters in Mali. Rising prices for gold and cotton, Mali’s two main export earners, failed to keep the country’s economy growing last year, amid a coup and security crisis. French troops are now helping Malian government troops to battle Islamist rebels in the north. If political stability can be restored, Mali’s economy could grow by about 5% this year, according to the World Bank.

The role of Mauritius as an international financial center is growing. Mauritius Commercial Bank is the country’s oldest and largest bank and has 42 branches, in addition to subsidiaries in Madagascar, Mozambique, the Seychelles and the Maldives. MCB’s earnings rose 12.8% in the six months ended December 31, 2012—the first half of its fiscal year—thanks to growth in foreign-sourced income. Fee income rose 15%, owing to growth in regional trade finance and payment services.

Attijariwafa Bank, based in Casablanca, has 2,269 branches in Morocco and 613 branches in the group’s international network. The bank controls nearly 40% of the lending market in Morocco. It has subsidiaries in 11 African countries, as well as local banks in seven countries in Europe that cater mainly to Moroccan expatriates. The group expanded its branch network, particularly through Wafacash, its low-income banking subsidiary. Dar Assafaa, the bank’s Islamic subsidiary, serves very small enterprises and invididuals.

Millennium bim is Mozambique’s largest bank, with 151 branches and a 35% market share. Portugal’s Millennium bcp is the majority owner. Milllennium bim’s mobile-banking channel has 400,000 customers. In addition, the bank has extended traditionally ATM-based transactions to the point-of-sale network installed at merchants around the country. Millenium bim’s return on equity was 27.2% in 2012, down from 38.8% in 2011. The bank’s assets increased by 16% last year, while earnings fell by 12.9% from a year earlier.

Windhoek-based Standard Bank Namibia is the country’s oldest and largest bank, with 45 branches. It is part of the pan-African Standard Bank Group of South Africa. Standard Bank Namibia’s corporate and investment bank focuses on sectors that are most important to emerging markets, including energy, power, mining and metals, construction and telecommunications. Brazilian oil company HRT has begun exploring for oil offshore of Namibia in a sub-salt formation similar to Brazil’s.

FirstBank of Nigeria is the country’s largest bank, with 715 branches and more than five million customers. Since 2009 it has consistently been the country’s leading bank in terms of earnings, assets and deposits. FirstBank acquired Banque Internationale de Crédit in the Democratic Republic of Congo in October 2011. It plans to gradually expand across sub-Saharan Africa. Last year the bank launched a mobile-banking service. It has a 30% market share of the debit card business in Nigeria and plans to develop a large agent and merchant network.

Banque Commerciale du Rwanda was privatized in 2004, with the government maintaining a 20% stake. The bank’s main shareholder, private equity firm Actis Capital, sold its 80% interest last year to a group led by Kenya’s I&M Bank and two European development banks: Germany’s DEG and France’s Proparco. Banque Commerciale du Rwanda concentrates on lending to small and medium-size enterprises, which account for 98% of the country’s businesses. The expansion of credit to the private sector has helped to boost Rwanda’s economy, with gross domestic product up by 8% last year.

Dakar-based United Bank for Africa (Senegal) began operations in May 2009. It is part of the United Bank for Africa Group, which offers universal banking to 7.2 million customers in 19 countries in Africa. UBA Senegal offers retail and corporate banking, cross-border payments, trade finance and investment banking. Senegal’s economy is based mainly on fertilizer production and commercial fishing, as well as peanut farming.

ICB Sierra Leone saw its earnings rise by 89% last year. That was down from the 115% growth in profits in 2011. The bank’s return on equity last year was 14.3%. “We strongly believe that in an economy such as Sierra Leone’s, which is developing [economically], enhancing access to finance for small and medium enterprises, more particularly the small enterprises, would not only help boost growth in the economy but also reduce unemployment,” says Viswanathan Sundaram, chief executive officer of International Commercial Bank — Sierra Leone. He says the bank has steadfastly stuck to the basics of banking by garnering deposits at low cost and lending in a safe manner at competitive rates. Customer deposits increased by 74% last year.

Standard Bank, Africa’s largest bank, reported a 10% rise in headline earnings last year to $1.77 billion. Including proceeds from the sale of its majority stake in Standard Bank Argentina, earnings rose 23% to $1.95 billion. The South African bank is downsizing its operations outside of Africa to reduce costs and increase its focus on its home market and select markets in the rest of Africa. It made divestitures from Russia and Turkey last year, in addition to Argentina. Meanwhile, Standard Bank, which is 20% owned by Industrial and Commercial Bank of China, is jointly exploring areas of greater cooperation with its Chinese partner, including global markets and commodities. In March it appointed two new chief executives to replace Jacko Maree, who stepped down after more than 13 years as chief executive officer. Maree will remain at the bank but will not perform an executive role.

Ecobank Togo operates 22 branches in and around Lomé, the capital and commercial center of Togo. The bank controls approximately 25% of the assets of the Togo banking system. It is the oldest bank in the Ecobank system, and Lomé houses the headquarters of its parent company, Ecobank Transnational. Togo’s main exports are cotton, phosphates, coffee and cocoa. The country’s export-processing zone is home to pharmaceutical, cosmetic, and food-processing companies.

Banque Internationale Arabe de Tunisie is the largest private-sector bank in Tunisia, with 156 branches. BIAT is a universal bank with a well-established franchise. The operating environment in Tunisia has deteriorated, however, following the assassination in February of opposition leader Chokri Belaid. Political instability threatens to derail negotiations with the International Monetary Fund for a $1.8 billion loan. More than two years after the Arab Spring uprisings, which began in Tunisia, the country is still struggling with high unemployment.

Stanbic Bank Uganda, the country’s largest bank, is majority-owned by South Africa’s Standard Bank. The bank’s earnings rose 7.4% in 2012 to $50 million, boosted by an 18.8% increase in interest income and a 22% rise in fee income from a year earlier. Charges for Stanbic Bank Uganda’s nonperforming loans increased, however, as Uganda’s economy struggled with high interest rates and high inflation. The bank increased its capital for the second year in a row in 2012, with an offering of bonus shares on the Ugandan Stock Exchange.

Standard Chartered Bank Zambia maintained its position in 2012 as the most profitable bank in the country for the third year in a row. The bank’s revenue increased by 29% last year, and profits before tax rose by 50%. Much of the bank’s financial support has been directed toward the construction and manufacturing sectors, which make up 20% of Zambia’s GDP and are expected to be the engines of growth for the future. Consumer banking had another record year in 2012, with income up by 29% and operating profit increasing by 45%.

Standard Chartered Bank Zimbabwe, the country’s largest bank by assets, has maintained a strong and liquid balance sheet. Ralph Watungwa, the bank’s CEO, says: “We have a conservative risk appetite, and our risk radar is turned on full.” The bank has 25 branches, and in 2011 it introduced mobile banking in partnership with Telecel and Net One. Standard Chartered was the first bank in Zimbabwe to accept the China UnionPay card at its ATMs. UnionPay is the national bankcard association in China.